9:04 AM Nov 19, 1996

CAN DRAFTING RECONCILE OPPOSING STANDS?

Geneva, 19 Nov (Chakravarthi Raghavan) -- The informal meeting of Heads of Delegations at the World Trade Organization (WTO) is due to meet Friday to consider and agree on a draft Ministerial Declaration for the Singapore Ministerial Conference (SMC) of the WTO.

At the informal HOD meeting on 4 November, when a draft prepared by the secretariat was discussed, sharply differing views emerged among delegations both on new issues sought to be brought on the WTO agenda -- like investment, labour standards, competition questions -- as well as on future work on issues already on the WTO agenda and on environment questions.

Some trade officials see major difficulties in evolving a compromise. Remitting the issues to ministers for decision could lead to confrontations at a political level and sour the atmosphere of the SMC.

Beginning with only India voicing its opposition, (in November 1995, at an UNCTAD organized and EC-Canada financed seminar outside Geneva), the opposition to the WTO investment rules idea has now gathered support from a number of key developing countries, with their leaders coming out in public and providing high political visibility to this opposition.

As a result, viewpoints within the WTO on the investment question, the are now polarized.

Canada, Japan, the EU have been on one side, and more recently supported by 8 or 9 others, seeking a working group to study the issue of trade and investment and report to the General Council.

Ranged on the other side are a number of developing countries (Egypt, Ghana, Haiti, India, Indonesia, Malaysia, Tanzania and Uganda) who have come out with a joint paper outlining their reasons for total opposition to any WTO study or work in this area -- and suggesting that any such study of the complex relationships between trade, investment and development should take place in the UNCTAD intergovernmental process mandated at UNCTAD-IX.

At the 4 November HOD meeting, where these views were expressed clearly and openly (making it difficult for the secretariat to dismiss them), and also received support from a few others from the floor, a clear deadlock emerged between the Canada-Japan led move for a study process, the rejection of such an approach by the eight developing countries. In between several others, mainly from Latin American region, have said they could along with a study process, even when expressing reservations on negotiations for an MIA.

Starting with his public position early this year that opposition was limited to one or two countries, Ruggiero and the proponents of the WTO role in investment negotiations, have been surprised at the strength of the growing opposition and are now trying to see how to wear down the opposition and get the investment issue into the WTO door.

Since the 4 Nov HOD meet, according to trade officials, Ruggiero has been attempting through the "green room" process, and the smaller drafting groups, to evolve some compromise language that would enable the SMC to launch a process that would ultimately lead to negotiations at the WTO -- attempting in the process to try and isolate what is believed by him to be a small group of developing countries.

But with views so sharply opposed, it is difficult to see how any drafting exercise, can resolve the differences.

On the labour standards issue, pushed mainly by the US, the initial Ruggiero draft (before the 4 November meeting) had no formulations.

Since then, in the "green room" and drafting processes, according to trade officials, there have again been efforts to formulate some compromise, but given the fundamentally opposing viewpoints this has not got far - whether on investment or labour standards.

Some WTO delegations are suggesting that the SMC might just have to be content with a Chairman's summary (which, though not binding on any one, is itself usually a negotiated document) listing again all the issues on which no consensus could be reached at Singapore, but which could be pursued at the WTO (if delegations are able to achieve a consensus).

On the environment and sustainable development issues, after considerable and often bitter wrangles within the Committee on Trade and Environment (CTE), the CTE made some recommendations for continuing its work, beyond Singapore, in all the areas of its remit, and reporting to the WTO General Council.

The original secretariat draft declaration reflected this compromise within the CTE. However, the EC has now formulated and circulated some changes which appear subtly change the CTE consensus.

While the EC has claimed that its "suggested additions" have been drawn from the recommendation paragraphs of the CTE report (paras 167, 168 and 171), a closer look at the proposed changes and the CTE recommendations seem to suggest important changes and omissions (that have not been mentioned in the EC explanations).

The EC proposals subtly delink the inextricable link (envisaged at the UNCED Rio summit and the Marrakesh declaration) between "environment protection" and "sustainable development" and has reformulated or rearranged some of the sentences in the CTE report so as to give a different emphasis.

For e.g. the CTE (para 167) says that its discussions "have been guided by the considerations contained in the Ministerial Declaration that there should not be nor need be any policy contradiction between upholding and safeguarding an open, equitable and non-discriminatory multilateral trading system on the one hand and acting for protection of the environment on the other. These two areas of policy-making are both important and they should be mutually supportive in order to promote sustainable development"

In the EC proposal, the "discussions have been guided" is sought to be changed to the "CTE's work has confirmed"; and the formulation about policy-making in the two areas "should be mutually supportive" is changed to "both (are) essential to promoting sustainable development."

While the CTE report says its discussions have demonstrated the capacity of the MTS to "further integrate environmental considerations and enhance its contribution to sustainable development without undermining its open, equitable and non-discriminatory character," the EC proposal (without making it clear) omits the references to sustainable development. Also omitted from the same sentence of the CTE formulation is the view that "implementation of the results of the Uruguay Round negotiations would represent already a significant contribution in that regard."

On the future of the CTE, a carefully negotiated para in its report said: "Work in the WTO on contributing to build a constructive policy relationship between trade, environment and sustainable development needs to continue. Therefore, the CTE recommends that it continue to work, reporting to the General Council, with the mandate and terms of reference contained in the Ministerial Decision on Trade and Environment of April 1994. Its rules of procedure shall be adopted by consensus."

In the EC proposal, this has been sought to changed: "We believe the work of the Committee underlined the importance of policy coordination in the area of trade and environment (omitting sustainable development)... The breadth and the complexity of the issues covered by the Committee's work program shows that further work needs to be undertaken. We intend to build on the work accomplished thus far, and therefore direct the Committee to continue its work on a permanent basis..."

Some Third World delegations said that the entire mandate of the CTE was a carefully negotiated text to cover all areas of the Uruguay Round Agreements, and firmly linking both environmental and sustainable development objectives. And the EC proposal changes this compromise and balance.